TMI Blog2022 (1) TMI 715X X X X Extracts X X X X X X X X Extracts X X X X ..... layed payment is a disputed fact by the Corporate Debtor and it can only be adjudicated by a court of competent jurisdiction. The claim of interest being disputed, no error has been committed by the Adjudicating Authority in rejecting the Application under Section 9 of the Code. The provisions of Code cannot be allowed as a recovery mechanism or to recover the claim of interest by Operational Creditor. The Application under Section 9 cannot be converted into proceedings for recovery of interest by Operational Creditor on delayed payment, that is not the object of IBC. The object of the IBC is to resolve the insolvency of the Corporate Debtor and to bring back the Corporate Debtor on its feet. The present is not a case where there is any insolvency resolution of Corporate Debtor. The Adjudicating Authority has rightly rejected the Application of the Appellant filed under Section 9 of the Code, which warrants no interference in this Appeal - appeal dismissed. - Company Appeal (AT) (Insolvency) No. 540 of 2020 - - - Dated:- 17-1-2022 - [Justice Ashok Bhushan] Chairperson , [Justice Jarat Kumar Jain) Member (Judicial) And [Dr. Alok Srivastava] Member (Technical) For the App ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cally stated that there is no operational debt due and payable and Section 9 Application deserves to be rejected. (vii) The Adjudicating Authority by the impugned order dated 15.01.2020 held that claim for interest is unconscionable, irrational, unjustified and does not qualify as an operational claim. It was further held that claim for interest on the delayed payment is a disputed fact and as such can only be adjudicated by the court of competent jurisdiction. 3. Shri Riju Raj Singh Jamwal, learned Counsel for the Appellant in support of the Appeal contends that Adjudicating Authority committed error in holding that the claim of interest cannot be included in the operational debt . It is submitted that in the invoices which were issued by the Appellant, there were clear stipulation that if payment is not paid within five days from the bill date, interest @ 5% per month will be charged. The interest on delayed payment is to be constituted as a debt defined under Section 3(11) read with Section 5(8) and 5(21) of the Code. The learned Counsel for the Appellant has relied on judgment of the Hon ble Supreme Court reported in (2009) 3 SCC 527 Vijay Industries vs. National Tec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the petition evidence that it has been in receipt of far more amounts from the Respondent than the outstanding figure agitated by it in the instant petition. 8. With regard to claim of interest by the Appellant, it was further pleaded that the audited balance sheet of the Applicant itself does not show any amount as being due from trade creditors for a period beyond six months during the financial years 2016-17 and 2017-18. Paragraph 34 of the reply in this context is as below: 34 That it is further submitted that the audited balance sheet of the applicant itself does not show any amount as being due from trade creditors for a period beyond 6 months during the financial years 2016-17 and 2017-18. A copy of the audited balance sheet of the Applicant as available at the website of the Ministry of Corporate Affairs containing the audited figures as at 31.03.2017 and 31.03.2018 is enclosed as Annexure AR-5. It is submitted that there is no question of such a heavy amount being not accounted for, shown and recorded in the audited financial statements of the Applicant Company. The only conclusion that can be drawn from this is that the Applicant itself has nowhere shown the de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ory, the adjudicating authority has to reject the application. The above judgment of the Hon ble Supreme Court has been followed subsequently and same principles have been reiterated time and again. 11. We may refer to another judgment of the Hon ble Supreme Court in (2019) 12 SCC 697 Transmission Corporation of Andhra Pradesh Limited vs. Equipment Conductors and Cables Limited where Apex Court again referring to judgment in Mobilox Innovations (supra) made following observation in paragraph 19: 19. In a recent judgment of this Court in Mobilox Innovations (P) Ltd. v. Kirusa Software (P) Ltd. [Mobilox Innovations (P) Ltd. v. Kirusa Software (P) Ltd., (2018) 1 SCC 353 : (2018) 1 SCC (Civ) 311] , this Court has categorically laid down that IBC is not intended to be substitute to a recovery forum. It is also laid down that whenever there is existence of real dispute, the IBC provisions cannot be invoked . 12. We may also refer to judgment of Hon ble Supreme Court in (2019) 4 SCC 17 Swiss Ribbons Private Limited and Anr. vs. Union of India and Ors. where Apex Court has held that primary focus of the insolvency legislation is to ensure revival and continuation of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... must be by way of interest payable on the principal amount or otherwise. 31. The respondent never denied the demand of interest as such, but in its reply dated 30-12-2003 merely stated that a sum of ₹ 16,80,468 (sic ₹ 15,80,460) was due. 14. In the present case, when the Corporate Debtor in its reply to Section 9 Application has clearly and categorically denied it liability to pay any interest, there was no case of payment of any agreed interest. 15. We may also refer to a judgment of this Tribunal where this Tribunal has refused to proceed with the insolvency proceedings after noticing that Application was being pursued only for realization of interest amount. In S.S. Ploymers vs. Kanodia Technoplast Limited, Company Appeal (AT) (Insolvency) No. 1227 of 2019 in paragraph 5 following was laid down: 5. Admittedly, before the admission of an application under Section 9 of the I B Code, the Corporate Debtor paid the total debt. The application was pursued for realisation of the interest amount, which, according to us is against the principle of the I B Code, as it should be treated to be an application pursued by the Applicant with malicious intent (to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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